Spotlight on AHTC saga: in good faith and in bad faith

payment, FMSS, WP, conflict, process, allowed, work, contract, councillors, issue, MND, know
In the beginning, Singaporeans did not know that FMSS was owned by close affiliates of Workers’ Party (WP).
Only WP and the Ministry of National Development (MND) knew these facts.
But MND left them alone because, as then National Development Minister Khaw Boon Wan said, they allowed some latitude with regard to party affiliation because TCs are political by nature. So MND did not interfere with the award of contracts to FMSS.
Then one day, the WP decided to play politics in Parliament during the debate on AIM.
They wanted to whip up a furore over AIM being a company set up by PAP members.
Not knowing that MND knew the fact of FMSS being owned by close affiliates of WP, Pritam Singh boldly declared in Parliament that transactions with political party-owned companies should be banned by the TC Act.
That’s when Mr Khaw Boon Wan rebutted the WP and told them to look in the mirror. in good faith or in bad faith in good faith or in bad faith
And so folks, that was how the whole of Singapore came to know that FMSS was owned by close party affiliates who acted as assenter and proposer to the WP’s Ang Mo Kio GRC team in the 2006 General Election.
There’s nothing wrong with WP appointing FMSS as their managing agent. This was why MND left them alone in the first place and did not interfere.
This is also why we are not surprised by the Court of Appeal saying that WP appointed FMSS in ‘good faith’.

So what is the issue?

In good faith, in bad faith.  Are you now confused?
You see, from the beginning, the issue is not that they had appointed friends to help them manage their town council. 
The issue is that they allowed their friends to set up a flawed payment system involving conflict of interest, and then being fully aware of this conflict of interest, did nothing to correct it and allowed it to persist until MND decided to step in and put things right.
And THAT is the issue today.
The issue is not that they appointed friends ‘in good faith’.
They issue is that they allowed their friends to set up a flawed payment process and that’s ‘in bad faith’.
The Court of Appeal found them to be woefully negligent, and acting in bad faith, and allowing this to persist for 3 years.

In the words of the Court of Appeal

The Court of Appeal said (emphasis added):
Simply put, we agree with the Plaintiffs that just because payments were made in accordance with stipulated rates on a monthly basis that did not absolve the Town Councillors from having to satisfy themselves that the work was in fact done (and done satisfactorily), given that this risk of improper payment subsisted irrespective of the type of payment obligation under the Contracts. (442)

The Town Councillors and the Employees were clearly alive to the concern that the Conflicted Persons were involved in the payment process. (444)

At the outset, what is clear is that there was no actual verification of whether work was done, even at the Fourth Stage of the payment process .. Indeed, there appeared to be no actual certification or verification of work being done; the various steps of the payment approval process simply involved tallying numbers to ensure that the figures were consistent. (449)

Furthermore, the supporting documents relied upon by the Chairman and Vice-Chairman were prepared by FMSS’s personnel, which meant that the signatories were not independently informed other than by persons who were conflicted. (449)

We agree with the Plaintiffs that this was simply not a system that was meant to ensure that each payment was justified. .. Ms Lim’s own concession that it would not be practicable for her to “personally verify on the ground that every item of work is completed before appending [her] signature to the cheque” only serves to underscore the fact that the Standing Instruction was a woefully inadequate safeguard in the light of the involvement of the Conflicted Persons. (450)

We are unable to see how such conduct which we consider amounted to gross negligence can be said to have been done in good faith. We explain. The importance of ensuring that the disbursement of public moneys be subject to oversight cannot be gainsaid. (451)

This was not mere negligence. This is because it is clear that the Town Councillors were aware of the existence of Ms How’s and Mr Loh’s potential conflict of interest as early as 19 May 2011, but failed to properly address such conflict. (452)

And such conflict must have been even more apparent by August 2011, when the LOI had been signed, AHTC had awarded the First MA Contract to FMSS, and both Ms How and Mr Loh had assumed key managerial roles in AHTC, as General Manager/Deputy Secretary and Secretary respectively – all this while Ms How and Mr Loh remained shareholders, directors and employees of FMSS. (452)

The risk of overpayment or at least improper payments to FMSS was clearly present in the Town Councillors’ minds..  .. the payments process instituted was woefully inadequate.  (452)

AHTC simply did not have the adequate protocols or processes in place to assess independently and objectively the service levels of the work done by FMSS and FMSI. Accordingly, the extent of this risk cannot be overstated. (452)

Yet, this state of affairs was allowed to persist for at least three years – from July 2011 to July 2014 – and in that period of time, AHTC disbursed over $23m under the Contracts. The character of such neglect, in sum, was at least potentially grave. (452)

It appears to us that the Town Councillors simply took it on faith that FMSS was performing the work it was contracted for and being paid to do. .. This was exacerbated by the manifest conflicts of interest which were clearly perceived and understood by all concerned. In our judgment, this was a paradigm example of poor financial governance and a breach of the duty of care. We are also satisfied that s 52 of the TCA does not operate to shield the Town Councillors and Employees from personal liability because, given the severity of this failure, it could not be said to have been done in good faith. (454) spotlight on ahtc saga in good faith and in bad faith spotlight on ahtc saga in good faith and in bad faith
What the Appeal Court said confirmed that Sylvia Lim lied to residents about no conflict of interest.

To sum up

To sum up, there was no verification of actual work done, no effort to justify each payment

The WP MPs were fully aware that conflicted persons were involved in the payment process. The risk of overpayment or improper payments was clearly present in their minds and the payment process was woefully inadequate. Yet they allowed this state of affairs to persist and over a period of 3 years, awarded over $23m in contracts. The character of such neglect is grave.

The behaviour of the WP MPs  is not just mere negligence, it is gross negligence and done in bad faith


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